Combating Rising Oil Prices

Although the price of oil has dropped over the past two years, global demand has significantly risen, and gasoline is still costing the public just fewer than three dollars per gallon. As of April 2, 2010, the average price for a barrel of oil in the United States is right around eighty-five dollars. This is causing a lot of people to drive less and trade in their gas hogs for smarter, more efficient vehicles. Alternative fuels and hybrids are becoming a dinner table conversation in a lot of households right now. People who cannot afford to trade up to a new car, however, are left wondering when the gas price hike is going to end. The big question everyone wants to know is why people continue to pay so much at the pumps. This is a very valid question considering the following statistic. From the start of 1978 through December of 1998, the price of oil fluctuated only a few dollars. For the most part, prices stayed right around the fifteen dollars per barrel range and actually dropped to under ten dollars per barrel at the end of 1998. Amazingly, in the twenty year period since then, the price of a barrel of oil rose almost one hundred and thirty dollars at the peak of the increase in July of 2008 (EIA, 2010). This brought on all forms of criticism from the American public and created debates about price gouging and corruption in the oil industry. The increase in the price of oil can be mainly attributed to the fact that the world’s demand for crude oil had become stagnant for many years. The United States was the main consumer that relied on oil. This has been changing, however, over the last several years as rapidly developing countries such as China and India are beginning to rely heavily on oil as well. While production of oil was at a standstill, global demand for it was rising. This caused several shortages and, in turn, caused a major...

You May Also Find These Documents Helpful

...Economic Impact of RisingOilPrices in Automotive Industry
The rise in the oilprices plays a major role in the automotive industry. “The world consumes over 82 million barrels of oil per day (BPD), with the united states taking roughly 20 million BPD” (McFarlane). Oil provides 97 percent of the transportation fuels that helps to run the cars, trucks and other vehicles in the nation’s highway (Heinberg). Thus, when the price of the oil rises, it clearly concerns the auto industry because the companies are competing with each other to meet the new demands for more fuel efficient consumer conscious at reduced price. There is no doubt that it is affecting the profit margin of the company. Moreover, increase oilprice is also affecting the type of vehicles demanded by the customer and the way those vehicles are designed.
The demand of oil and the difficulties in oil refineries is the major cause for the increased oilprice. Oil is used mainly for two purposes: Firstly, to make the gasoline and secondly in tire production. The gasoline prices in the US have increased dramatically during the last few years reaching averages over $ 3.00 per gallon (EIA-Energy Information Administration). Oil is the major...

...121
Dr. Jennifer Hoofard
OilPrices and Their Impacts on the United States
Across the world, everyone uses some form of a petroleum product in his or her daily lives. The United States uses about 3.5 gallons of oil per person per day. With 318.1 million people that is about 1.1 billion gallons of oil per day used in the United States in some way. However, what does all this oil cost the United States? Can the government regulate the cost?
Some of the most common petroleum products used in the United States are: gasoline, diesel, basketballs (rubber), shoe polish, and many more. There are approximately 6000 products made with petroleum.
An industry in the US that is nearly purely powered by oil and gas is shipping, whether by car, truck, rail, sea, or air. Whether across the street or from LA to New York, just about everything gets put on a truck or train and taken from point A to point B. CSX (a major freight train service serving the eastern United States) claims they can move 1 ton of freight nearly 450 miles on one gallon of fuel.
At today’s rate, a barrel of crude oil costs $99.99. The US Energy Information Admiration (EIA) states from 1 barrel of crude oil (42 gallons) you can get approximately 10 gallons of diesel fuel and 19 gallons of gasoline, plus some other products. This calculates diesel to be about $2.38 per gallon, when in reality it is...

...In the past, the price of oil has led to economic recessions, such as the 1973 and 1979 energy crises. The effect the price of oil has on an economy is known as a price shock. In many European countries, which have high taxes on fuels, such price shocks could potentially be mitigated somewhat by temporarily or permanently suspending the taxes as fuel costs rise.[138] This method of softening price shocks is less useful in countries with much lower gas taxes, such as the United States.
Some economists predict that a substitution effect will spur demand for alternate energy sources, such as coal or liquefied natural gas. This substitution can only be temporary, as coal and natural gas are finite resources as well.
Prior to the run-up in fuel prices, many motorists opted for larger, less fuel-efficient sport utility vehicles and full-sized pickups in the United States, Canada, and other countries. This trend has been reversing due to sustained high prices of fuel. The September 2005 sales data for all vehicle vendors indicated SUV sales dropped while small cars sales increased. Hybrid and diesel vehicles are also gaining in popularity.[139]
In 2008, a report by Cambridge Energy Research Associates stated that 2007 had been the year of peak gasoline usage in the United States, and that record energy levels would cause an "enduring shift" in energy...

...Ukraine, oilprices increased significantly as did the profit earned by many oil companies including PETRONAS. Politicians in Malaysia opposed the government policy to oilprice increase by twenty cents and the withdrawal of oil subsidy.
As a manager or policy implementer, discuss the pros and cons if this policy in the context of the various theories of profit.
Introduction
The government of Malaysia increased the price of oil by 20 cents and withdrawal of the oil subsidy causing the people in the country panic. This is due to they afraid the increasing price will hikes up the price of normal goods in the market. Every businesses including the oil companies aims at maximising profit. As in the wars happening in Iraq, Syria, and Ukraine, it surely is a good chance to maximise the profit. If the policy is applied, pro and cons arise from the effect of the implementation.The profitability of the oil companies is greatly influenced by the demand of the oil. The usage of oil in daily's life especially in the industrial country is huge. Consumption of the oils getting larger and shows no sign of stopping whereas this recourses will gone someday. Supply is occur when supplier willing to sell for the right price and time. If demand remains...

...PROs AND CONs OF INCREASING OILPRICE
1. INTRODUCTION
In this decade, the price of oil has been raised 3 times. The era of President SBY has the record of increasing oilprice (premium). The policy was made by SBY has become pro and con between the expert of economic. Some people said that increasing the oilprice is just can’t be done because it’s contra with UU, but government said that if we don’t raise the oilprice it will absorb the APBN because the import oilprice is higher and higher time by time.
Increasing the oilprice will have domino effect for government, if government increases the oilprice while the income of people is fixed so the purchasing power will decrease. But if the government doesn’t increase the oilprice it will harm national budget.
The issues of and concerns about the energy sector are multi-faceted, often international, spatially differentiated and dynamic due to the pivotal role of energy in any individual’s day-to-day life as well its importance as a key input to the production processes that transform inputs to goods and services, and because of the sector’s multi-dimensional strategic importance (in terms of macro-economic influences, geo-political implications, and environmental...

...A rise in global oilprices by $ 10 per barrel would reduce India's economic growth by 0.2 percentage points and also affect the country's current account deficit, Goldman Sach said.
"A VAR (value-at-risk) analysis suggests that a $ 10 increase in oil would reduce GDP growth by 0.2 percentage point," Goldman Sachs said in its latest edition of 'Asia Economics Analyst'.
India on Monday voiced serious concern over the rising crude oilprices, which have touched a two-year high, and said it could badly affect global economic growth and even give rise to inflationary pressures.
"The current oilprices will spur global inflation and retard economic growth. India feels that this is the concern that needs to be addressed on priority," Minister of State for Petroleum and Natural Gas, R.P. N. Singh said at the 4th Asian Energy Ministerial Round Table in Kuwait.
Mr. Singh said the current rise in international oilprices is a cause for worry not only for emerging economy like India but for the entire world as the recovery from recession is still fragile. Crude oil is currently ruling at around $108 a barrel, necessitating either a sharp increase in domestic fuel prices or a hefty subsidy payout by the government.
At current level, state-owned oil firms are projected to lose a whopping Rs....

...Oil and Gas PricesOil and Gas 2There are many issues that cause the cost of oil and gas to increase. The main contributing issue to the increasing cost of oil and gas is supply and demand, when demand is greater than supply, the price of oil and gas will increase. The factors that affect supply include increased demand, problems with refineries and pipelines, and disruption to supply or threat of disruption to supply.With the increased demand for oil in the United States and other countries such as India and China; the extra demand for oil has put enormous pressure on available oil reserves. The Energy Information Administration stated, “If refinery or pipeline and/or reductions in imports cause supplies to decline unexpectedly, gasoline inventories (stocks) may drop rapidly. This may cause wholesalers to bid higher for available supply over concern that future supplies may not be adequate” (Energy Information Administration, 2008, para. 9). With this in mind, the other underlying factors that affect supply are disruption to supply or threat of disruption to supply along with The Organization of Petroleum Exporting Countries (OPEC).The Organization of Petroleum Exporting Countries is an organization of oil producing countries which produces over 40% of the world’s crude oil and has two-thirds of the world’s oil reserves....